This works with cutscenes as well.

In the Steam library, right click on the game and go to "Properties".


Once you've opened "Properties", in "General", type the command under the "Launch Options" for whatever resolution you want to play.
(Example: resx=3840 -resy=2160 for 4K as shown in the image below)


To avoid stretching in widescreen resolutions as the game was not made with 16:9 aspect ratio in mind but 4:3, in the Steam library, right click on the game and go to Manage > Browse local files.


Once you're in the game's main folder, right click on alone4.exe and go to "Properties".


Once you've opened the game's properties, go to the "Compatibility" tab and check "Run in 640 x 480 screen resolution" and click "Apply".


Next, still in the "Compatibility tab", click on "Change high DPI settings". refer to the previous image. Once opened, do the following in the image below then click "Ok" and "Apply".


Now you're all set! You'll be able to play at your preferred resolution without stretching.
Your game should now look like this:

As I use a Xbox controller, this guide will focus on setting up controller support for Xbox controllers.

First, install XInputPlus: https://sites.google.com/site/0dd14lab/xinput-plus
Once installed, extract it into a new created folder, you can name it whatever. In order to extract files, you need WinRAR or 7-Zip.
Open XInputPlus.exe, once opened, set the target program to alone4.exe.
(Path: C:\Program Files (x86)\Steam\steamapps\common\Alone in the Dark - The New Nightmare\alone4.exe)
After you've done that, go to the "DirectInput" tab and check "Enable DirectInput Output".
Assign Right Stick to Z Axis/Z Rot.
Assign LT/RT to Button 11/12.
Assign DPAD to Button 13-16.
Click "Apply" then "Ok".

The great thing about XInputPlus is that it will allow you to use the D-Pad for movement and able to use the Left and Right Trigger buttons.

This next step is optional and isn't entirely necessary but I still do it anyway just to be on the safe side. This must be done after setting up XInputPlus. Credit to the "Gamer Info" article for providing this workaround that I will include in this guide.

Install x360ce 32 bit version: https://gamerinfo.net/redirect.php?s=https%3A%2F%2Fs.gamer-info.com%2Fmanual%2Ffiles%2Fx360ce.zip
Extract it into the game's main folder.
(Path: C:\Program Files (x86)\Steam\steamapps\common\Alone in the Dark - The New Nightmare)
Once you've done all that, right click x360ce.exe and go to "Properties".


Next, go to the "Compatibility" tab and check "Run this program as an administrator", click "Apply" then "Ok".


Open x360ce.exe and a window with a warning will open. Just click "Create".


Select "Search automatically for settings" and check "Search the Internet" then click "Next".


Click "Finish" once install is complete.


Click "Auto" on the bottom right then click "Yes" in a popup window to fill in all the buttons automatically then click "Save" on the bottom right to save the settings.


Go to your Steam library and right click on the game then go to "Properties".


Once you've opened "Properties", go to "Controller" and under "OVERRIDE FOR ALONE IN THE DARK: THE NEW NIGHTMARE", hit the drop down arrow and select "Enable Steam Input" so the game can detect your controller.


That's it! Now you can play the game with your controller.
Here are the controls for Xbox controllers:
A - Fire/Action
X - Run
Y - Inventory
RT - Map (Is glitchy as the map have trouble closing. Press LT to exit the map as a workaround.)
LT - Radio
B - Flashlight
LB - Free Look (Is wonky, trouble with doing Aline's light puzzle)
RB - Aim
Start - Pause
D-Pad or Left Analog Stick for movement.

Thank you for reading my guide. I hope this guide was useful. Let me know if this guide was helpful or if you ran into any issues.